Trumpcare

Trumpcare’s Implosion Has Endangered the Entire G.O.P. Agenda

Reeling from the heath-care defeat, President Trump needs a victory—but faces an uphill battle on tax reform.

By Mark Wilson/Getty.

Even before the House Republican plan to repeal Obamacare crashed and burned, President Donald Trumpsounded bored with the complexities of the health-care bill. “I want to cut the hell out of taxes, but before I can do that—I would have loved to have put it first, to be honest,” Trump sighed at a rally in Nashville earlier this month. A week later, at a rally in Louisville, he explained that wrapping up health care was a prerequisite to more exciting parts of his legislative agenda. “We gotta get this done before we can do the other,” he said grudgingly. “In other words, we have to know what this is before we can do the big tax cuts. We got to get it done for a lot of reasons, but that’s one of them.”

But cutting the hell out of taxes will not be easy, either. “It’s like asking whether climbing Kilimanjaro or another mountain of equal height is harder,” Michael J. Graetz, a tax law professor who served as a Treasury Department official in the early 1990s, toldThe New York Times. “They are both very hard, very exhausting, and seem to occur once in a generation.” And the collapse of Trump’s health-care push only makes tax reform harder.

For one, the president’s failure to rally support for the unpopular American Health Care Act revealed the limits of his political influence. When push came to shove, congressional Republicans were more than willing to stand up to Trump, denying him the support he needed to get his bill through the House. And when he threatened to call for a vote anyway, forcing lawmakers to take sides and allowing him create an “enemies list”, they called his bluff, and Trump folded.

Moving forward without Obamacare repeal in place also means that Republicans have less revenue to work with. The president’s grand scheme for tax reform originally hinged on the elimination of the nearly $1 trillion in federal spending, offset by tax cuts. Now, without those savings, it becomes harder to cut the corporate tax rate without blowing out the deficit. “They have to have a victory here,” Stephen Moore, a Heritage Foundation economist who advised Trump during his White House bid, told the Times. “But it is going to have to be a bit less ambitious rather than going for the big bang.”

The contentious debate leading up to Trump’s decision to pull the vote also exposed deep rifts in the Republican Party. After marching mostly in lockstep throughout the Obama years, during which Republicans voted to repeal Obamacare dozens of times, conservatives could not agree on even a basic set of shared principles on health-care reform once they won control of both elected branches of government. Mick Mulvaney, the White House budget director, toldMeet the Press that the bill’s failure had been an “educational process,” revealing that Washington is “a lot more rotten than we thought it was.” But the problem was not rottenness so much as vast ideological differences separating the various Republican caucuses in the House and Senate. Those divisions will not be any easier to bridge now that the Trump administration is turning to tax reform. Just as the G.O.P. was unable to agree on how to fund Obamacare, or which benefits to preserve, so too is the party at odds over the most critical questions involving the Trump plan to overhaul the tax code.

At the center of the debate is the so-called “border adjustment tax,” a funding mechanism promoted by Paul Ryan and Rep. Kevin Brady, the chairman of the Ways and Means Committee, which would tax imported goods and give a tax break to domestic exporters. A 20 percent tax on imports could generate as much as $1 trillion in revenue over ten years—more than enough to offset lower corporate and individual rates. But a number of Republicans have bristled at the proposal, which they argue is effectively a tax levied on American consumers. On various occasions, Trump has both shown support for the border adjustment tax and characterized it as “too complicated.” There is disagreement among his own advisers, too: according to The Washington Post, the protectionists in Trump’s inner circle—White House chief strategist Stephen Bannon, senior policy adviser Stephen Miller, and National Trade Council Director Peter Navarro—are all for the tax, or something similar. Treasury Secretary Steve Mnuchin and National Economic Council Director Gary Cohn, among others, are worried that it will raise prices and could spark a trade war.

There is also a rift between the White House and Congress on who should take the lead on tax reform. “We have so much in common with the Trump administration, it wouldn’t make sense to have a separate tax bill from Secretary Mnuchin, a separate one from Gary Cohn, a third from whomever,” Brady said during an interview with Fox News on Sunday. “Why not take the basis of the House plan?” (Axios reports that the White House has yet to share a draft plan with Congress, suggesting that the border tax issue is still up for debate.)

The widening fault lines within the West Wing are more than just superficial. A Politico report, based on more than two dozen interviews, described a “distracting and toxic atmosphere” within the Trump administration and a White House littered with “warring power centers.” Cohn, the chief White House economic adviser who would be a key player in tax reform, has reportedly come under fire from both the president and Bannon. According to Politico, Bannon criticized Cohn for making too many concessions to moderate Republicans during the health-care negotiations, while Trump was reportedly unimpressed by Cohn’s appearance on Fox News last week, during which the former Goldman Sachs executive was tasked with selling the G.O.P. bill. (A White House spokesperson denied to Politico that Trump was unhappy with the performance.) Others have cast blame on Reince Priebus, Trump’s embattled chief of staff.

“The various warring fiefdoms and camps within the White House are constantly changing and are so vast and complicated in their nature,” one former Trump campaign aide said to Politico, “that there is no amount of reporting that could accurately describe the subterfuge, animosity and finger-pointing that is currently happening within the ranks of the senior staff.” If the Trump administration can’t diffuse the West Wing tensions, any attempt at tax reform will likely be dead on arrival. As Rich Lowry, the editor of the National Review, noted to the Times, there is a “disjunction” between Trump and the G.O.P. “He doesn’t have a congressional party. He doesn’t even really have a wing of a congressional party,” Lowry added. And without a cohort of support on Capitol Hill, the president is disproportionately dependent on his White House staff, which, to date, has failed to perform. If something doesn’t change—much like the arbitrary January 27 deadline Trump gave the G.O.P. to coalesce around an Obamacare replacement—Trump’s 100th day will come and go without the president having delivered on his promises.